United States District Court, N.D. California
ORDER GRANTING MOTION TO DISMISS Re: Dkt. No.
C. Spero Chief Magistrate Judge.
the City of Oakland (“Oakland”) brings this
action against the Defendants the Oakland Raiders (the
“Raiders”), the National Football League (the
“NFL”), and all thirty-one other teams in the
NFL, asserting that the Raiders' decision to leave
Oakland, and the NFL's approval of that decision, violate
the antitrust laws and the NFL's own governing documents,
among other claims. Defendants move to dismiss for failure to
state a claim under Rule 12(b)(6) of the Federal Rules of
Civil Procedure. The Court held a hearing on July 19, 2019.
For the reasons discussed below, Defendants' motion is
GRANTED, although Oakland may amend its claims if it can
allege facts sufficient to cure the deficiencies identified
below. If Oakland chooses to amend, it may file an amended
complaint no later than September 9, 2019.
Factual Background and Allegations of the Complaint
factual allegations are generally taken as true on a motion
to dismiss under Rule 12(b)(6), this section recites the
allegations of Oakland's complaint as if true. Nothing in
this order should be construed as resolving any issue of fact
that might be disputed at a later stage of the case.
Overview of Raiders History
Raiders were based in Oakland from the creation of the
franchise in 1960 through 1982, and again from 1994 through
the present, playing their home games for most of that period
at a stadium in Oakland known as the Coliseum. See
Compl. ¶¶ 38-47. The Raiders were managed and at
least partially owned by the late Al Davis for much of the
team's existence. See Id. ¶¶ 40-50. Al
Davis's son Mark Davis assumed control of the team after
his father's death in 2011. Id. ¶ 54.
team's history has been fraught with litigation, much of
it related to the team's 1982 move to Los Angeles and its
lease at the Coliseum after returning to Oakland. As but a
few examples, Oakland unsuccessfully attempted to acquire the
Raiders through eminent domain (City of Oakland v.
Oakland Raiders, 174 Cal.App.3d 414 (1985)), the Raiders
and a stadium commission in Los Angeles successfully sued to
enjoin enforcement of the NFL's then-existing rules
restricting movement of teams (L.A. Mem'l Coliseum
Comm'n v. Nat'l Football League, 726 F.2d 1381
(9th Cir. 1984)), and after the Raiders' return to
Oakland, the Raiders and Oakland engaged in litigation over
the status of the Raiders' lease of the Coliseum (Compl.
Plans to Relocate
2017, the Raiders announced that they were relocating from
Oakland to Las Vegas- giving rise to the present case. Compl.
¶ 2. Oakland alleges that Mark Davis and the Raiders had
considered such a move as early as 1998, when Mark Davis
registered the domain name “LasVegasRaiders.com”
(which he subsequently renewed annually) and acquired a cell
phone number with a Las Vegas area code. Id. ¶
December of 2008, NFL Commissioner Roger Goodell . . .
announced that the NFL wanted the Raiders to receive a new
stadium, ” but the Raiders renewed their lease at the
Coliseum the following year. Id. ¶ 52. The
Raiders nevertheless engaged in discussions with the San
Francisco 49ers regarding potentially sharing a stadium in
Santa Clara, California. Id. ¶ 53. In 2010, a
private entity proposed building a stadium in Los Angeles for
several NFL teams including the Raiders, and in 2012, the NFL
sent a memorandum to its teams describing circumstances under
which two teams could move to Los Angeles, which “was
believed to be largely addressed to the Raiders, Rams, and
Chargers.” Id. ¶¶ 53, 55. Those
three teams applied in 2016 to relocate to Los Angeles, but
the NFL granted the Raiders permission for such a move only
if the Chargers declined to move to Los Angeles. Id.
the Raiders also pursued relocation to Las Vegas. Mark Davis
told an NFL executive in 2014, “I'm going to Vegas,
baby!” Id. ¶ 57. Despite that statement
and the application to move to Los Angeles, the Raiders
continued negotiating with Oakland regarding a potential new
stadium. Davis announced in 2015 that he would commit $500
million to build a stadium if Oakland provided an additional
$400 million, for a total cost of $900 million. Id.
¶ 59. In January of 2016, Davis met with Nevada
billionaire Sheldon Adelson to discuss funding a $1.7 billion
stadium in Las Vegas, despite having announced his intention
to keep the Raiders in Oakland at a town hall “a few
weeks” earlier. Id. ¶ 62. Davis told a
Nevada tourism committee in April of 2016 that he would
commit $500 million to a stadium in Las Vegas, and the
following month characterized his position as a
“commitment” to move the Raiders to Las Vegas if
sufficient public funding was provided for a stadium.
Id. ¶ 63. “In August 2016, Adelson
convinced the Nevada state legislature to create a bill that
appropriated $750 million in public money, which had
originally been intended to fund a public project, to a
professional football stadium.” Id. While NFL
Commissioner Goodell stated in September 2016 that he hoped
the Raiders would reach an agreement for a stadium in
Oakland, Dallas Cowboys owner Jerry Jones encouraged Nevada
lawmakers to pursue bringing the Raiders to Las Vegas.
Id. ¶ 64.
meanwhile, attempted to reach a deal to keep the Raiders in
Oakland. An investment group including former NFL players
Ronnie Lott and Rodney Peete offered $600 million towards a
stadium in Oakland in November of 2016-$200 million more than
the $400 million in public funding that the Raiders had
claimed was needed in 2015. Id. ¶ 65. In
December of 2016, Oakland officials voted to enter
negotiations with Lott's group, earmarking $350 million
in public funds for the project, to be combined with $400
million from Lott's group and $500 million from the
Raiders for an approximately $1.3 billion stadium.
Id. ¶ 65. The proposal “included the
possibility that Mark Davis would eventually sell some part
of the team to the Lott group, ” which Oakland
characterizes as a development that the NFL should have
supported as consistent with its efforts to increase
leadership positions held by racial minorities. Id.
¶ 66. While Oakland contends that “the Lott
Proposal was real, ” the NFL dismissed it as incomplete
and unworkable, and a Raiders official at a
“closed-door NFL meeting” described it as a
“political, cover-your-ass joke.” Id.
Raiders officially applied to the NFL for permission to move
to Las Vegas on January 19, 2017. Id. ¶ 68.
NFL Rules Regarding Team Relocation
relocation of NFL teams is governed by Article 4.3 of the
Constitution and Bylaws of the NFL:
The League shall have exclusive control of the exhibition of
football games by member clubs within the home territory of
each member. No. member club shall have the right to transfer
its franchise or playing site to a different city, either
within or outside its home territory, without prior approval
by the affirmative vote of three-fourths of the existing
member clubs of the League.
Compl. Ex. 1 art. 4.3. In litigation related to the
Raiders' 1982 move to Los Angeles, the Ninth Circuit
affirmed a jury's determination that Article 4.3, at
least as the NFL sought to apply it to block that relocation,
was an unreasonable restraint of trade in violation of §
1 of the Sherman Act. L.A. Mem'l Coliseum, 726
F.2d at 1390-98. The Ninth Circuit's opinion discussed
changes that might make similar restrictions permissible:
To withstand antitrust scrutiny, restrictions on team
movement should be more closely tailored to serve the needs
inherent in producing the NFL “product” and
competing with other forms of entertainment. An express
recognition and consideration of those objective factors
espoused by the NFL as important, such as population,
economic projections, facilities, regional balance, etc.,
would be well advised. See L. Kurlantzick,
Thoughts on Professional Sports and the Antitrust
Laws, 15 Conn. L.R. 183, 206 (1983). Fan loyalty and
location continuity could also be considered. Id. at
206-207. Al Davis in fact testified that in 1978 he proposed
that the League adopt a set of objective guidelines to govern
team relocation rather than continuing to utilize a
subjective voting procedure.
Some sort of procedural mechanism to ensure consideration of
all the above factors may also be necessary, including an
opportunity for the team proposing the move to present its
case. Id.; see Silver v. New York Stock
Exchange, 373 U.S. 341 (1963) (without procedural
safeguards, the collective act of the Exchange in
disconnecting the wire service to a broker constituted a
boycott, per se illegal under § 1); cf. Deesen v.
Professional Golfers Ass'n, 358 F.2d 165 (9th Cir.),
cert. denied, 385 U.S. 846 (1966) (where PGA had
reasonable rules governing eligibility of players for
tournaments, there was not a § 1 violation). In the
present case, for example, testimony indicated that some
owners, as well as Commissioner Rozelle, dislike Al Davis and
consider him a maverick. Their vote against the Raiders'
move could have been motivated by animosity rather than
Id. at 1397-98.
point after that decision, the NFL Commissioner, pursuant to
his authority under Article 8.5 of the NFL bylaws to
“interpret and from time to time establish policy and
procedure in respect to the provisions of the Constitution
and Bylaws, ” promulgated “Policy and Procedures
for Proposed Franchise Relocations, ” fleshing out the
basic three-fourths vote required by Article 4.3 with
additional policies, procedures, and factors to be
considered. Compl. ¶ 32 & Ex. 2. Under that policy,
“each club's primary obligation to the League and
to all other member clubs is to advance the interests of the
League in its home territory, ” and relocations are
“disfavor[ed] . . . if a club has been well-supported
and financially successful and is expected to remain
so.” Id. Ex. 2; see Id. ¶ 33.
The policy also provides that the “business
judgment” to be exercised in deciding whether to
approve a transfer “may be informed by consideration
of” a non-exhaustive list of factors including, for
example, fan loyalty, stadium adequacy, financial
performance, the degree of good faith negotiations to remain,
and the extent to which team owners have contributed to
circumstances giving rise to the proposed relocation.
Id. Ex. 2 pt. C; see also Id. ¶ 34.
Oakland characterizes these policies as an effort to avoid
antitrust problems by complying with the suggestions of the
Ninth Circuit in Los Angeles Memorial Coliseum.
Id. ¶ 32.
the policy, “the relocating club will ordinarily be
expected to pay a transfer fee to the League” if its
request is approved, to “compensate other member clubs
of the League for the loss of the opportunity appropriated by
the relocating club and the enhancement (if any) in the value
of the franchise resulting from the move.” Id.
Ex. 2 pt. E; see Id. ¶ 36. Oakland
characterizes this fee as “a source of income that the
NFL Club owners do not share” and “a pure cartel
payment that goes straight to the NFL Club owners' bottom
lines when they together decide that a team should leave its
Host City.” Id. ¶ 37.
Approval of Relocation to Las Vegas
March 6, 2017, Bank of America agreed to provide financing
for the Las Vegas stadium, and the NFL teams' owners held
a meeting the same day to determine the fee that the Raiders
would be required to pay if the relocation was approved.
Id. ¶ 69. Oakland characterizes that meeting as
“effectively an auction for a ‘yes'
vote” where “the relocation fee was bid up until
enough NFL owners were satisfied with their personal payment
to vote ‘yes, '” and cites a report that
owners purportedly opposed to the relocation pushed for a
higher fee. Id. The owners agreed on a fee of $378
submitted its final proposal in conjunction with Lott's
investment group the same month, but the NFL rejected it as
not “clear and specific, actionable in a reasonable
timeframe, and free of major contingencies, ” and thus
not “a viable solution.” Id. ¶ 72.
Oakland Mayor Libby Schaaf appealed to the team owners to
reject the relocation, although she conceded “that
Oakland was ‘unable to provide the level of public
subsidy Nevada offers.'” Id. ¶¶
owners voted 31 to 1 to approve the relocation. Id.
¶ 75. According to Oakland, that vote violated the
NFL's relocation policy, because “every objective
factor to be considered in the Relocation Policies favored a
stay in Oakland, ” the Oakland market is more favorable
than Las Vegas, and Oakland negotiated in good faith the keep
the Raiders. Id. ¶¶ 75, 78-79. Oakland
cites a statement from the Miami Dolphins' owner Stephen
Ross-the lone dissenting vote-that he “just
[did]n't think everything was done to try and stay in
Oakland, ” id. ¶ 76, as well as comments
from Mark Cuban-the owner of a professional basketball team
in Dallas-that he considered Oakland to be a better market
than Las Vegas for an NFL team, id. ¶ 70.
alleges that the NFL and its teams act as an anticompetitive
cartel extracting significantly greater payments for stadium
construction and maintenance from host cities than would be
possible in a competitive market “by not only limiting
the number of NFL Clubs in the United States [to thirty-two
teams], but also collectively controlling, and dictating
under what terms and conditions, cities can have professional
football team presence.” Id. ¶ 8; see
also Id. ¶¶ 23-29 (alleging that the NFL has
secured public funding for a majority or significant share of
the cost of several stadiums costing hundreds of millions to
over a billion dollars each since 2000, and shared in
relocation fees of approximately $1.4 billion). Oakland
defines the relevant market for its antitrust claims as
“the market of all Host Cities offering, and all cities
and communities that are willing to offer (i.e.,
potential Host Cities), home stadia and other support to
major league professional football teams in the geographic
United States.” Id. ¶ 88.
asserts the following seven claims: (1) group boycott in
violation of section 1 of the Sherman Act, based on
Oakland's inability to retain the Raiders or attract
another NFL team so long as it is not willing to “pay
the enormous demands associated with new and renovated
stadia, ” id. ¶¶ 98-107; (2)
concerted refusal to deal in violation of section 1 of the
Sherman Act, based on Defendants' demands for stadium
funding as well as “freez[ing] the number of
competitive professional football teams, id.
¶¶ 108-18; (3) price fixing in violation of section
1 of the Sherman Act, based again on the demands for stadium
financing, id. ¶¶ 119-29; (4) declaratory
judgment that Defendants' conduct violates section 1 of
the Sherman Act as a result of Defendants' “boycott
of Oakland and refusal to comply with their own relocation
policies” and “redistribution of the resulting
ill-gotten supra-competitive gains though artificially set
relocation fees, ” id. ¶¶ 130-137;
(5) breach of contract under California law, based on the
premise that the relocation policy is a binding contract to
which Oakland is a third-party beneficiary, id.
¶¶ 138-46; (6) quantum meruit, based on
Oakland's alleged investments in the Raiders in reliance
on the relocation policy, id. ¶¶ 147-56;
and (7) unjust enrichment, on the basis that Defendants
received “ill-gotten gains resulting from their
unlawful, unjust, and inequitable conduct, ”
id. ¶¶ 157-61.
claims damages including over $240 million invested in
reliance on the Raiders remaining in Oakland, loss of
“tax and other income that it derives from the presence
of the Raiders and the economic activity their presence
generates, ” and reduced property value of the Coliseum
as a result of the stadium having “been boycotted by
the NFL.” Id. ¶ 96. Oakland seeks treble
damages for its antitrust claims. See Id. at 44
(prayer for relief).
Defendants' Motion to Dismiss
move to dismiss all of Oakland's claims with prejudice.
With respect to Oakland's antitrust claims, Defendants
argue that Oakland has not alleged antitrust injury, because
allowing the Raiders to move to a city willing to provide
more funding promotes, rather than impairs, competition, and
because the restrictions on relocation tended to benefit
rather than harm Oakland in its efforts to keep the team from
leaving. Mot. at 7-9. Defendants contend that Oakland lacks
standing because the only concrete injury it has alleged,
loss of tax revenue, is a sovereign rather than commercial
interest, because its indirect ownership interest in the
Coliseum is insufficient, and because Oakland is not a
participant in the same market as any defendant. Id.
at 9-12. Defendants also argue that Oakland has not
sufficiently alleged a relevant market. Id. at
12-14. Although Oakland's complaint asserts a relevant
market of cities and other communities “offering . . .
[or] willing to offer . . . home stadia and other support to
major league professional football teams in the geographic
United States, ” Compl. ¶ 88, Defendants argue
that such a market is not cognizable because “[h]ost
cities are not bought and sold, ” and markets must be
defined by a product itself rather than the consumers of a
product, Mot. at 13-14.
addition to those broad objections to Oakland's antitrust
theory, Defendants contend that Oakland's individual
antitrust claims are substantively flawed. According to
Defendants, Oakland's first two claims-“Group
Boycott” and “Refusal to Deal”-describe the
same theory of recovery, and fail because Oakland has not
alleged that that any team besides the Raiders sought to
prevent the Raiders or any other team from dealing with
Oakland. Id. at 15. Defendants contend that Oakland
cannot bring a boycott claim based on the other NFL
teams' failure to prevent the Raiders from
leaving Oakland. Id. As for Oakland's price
fixing claim, Defendants argue that Oakland fails to
“allege an agreement between the Raiders and any other
party regarding ‘rents' paid by Oakland.”
Id. at 16. Defendants argue that Oakland's
declaratory judgment claim is derivative of its antitrust
claims and is therefore also subject to dismissal for the
reasons discussed above. Id.
to Oakland's claim for breach of contract under
California law, Defendants argue that the NFL's
relocation policy is not a contract, both because it does not
include mandatory language and because it was imposed
unilaterally by the NFL Commissioner, not mutually agreed
upon by the teams. Id. at 17-18. Defendants also
argue that even if the relocation policy were construed as a
contract, Oakland is not a party to or third-party
beneficiary of the policy, and has not ...